Watchdog Indiana provides information about the revenues, spending, and long-term debt
assumption of Indiana local and state governments. An online community is
established where Hoosiers come together voluntarily to help encourage our state
and local governments better respond to the needs of working families.

Watchdog Indiana is a
non-profit, non-connected, and non-party advocate for good government that focuses on the
state and local tax burden of Hoosier working families.Watchdog
Indiana was founded by Aaron Smith on November
14, 2001.

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Immediate action needed!11/01/2014:State Senator Phil Boots (Crawfordsville) has promised to author
municipal annexation reform legislation for the 2015 session of the
General Assembly. Please contact Senator Boots
(765-362-1504, S23@in.gov) and
ask him to use the proposed municipal annexation reform legislation athttp://www.finplaneducation.net/municipal_annexation_reform.htmas the foundation for his municipal annexation
reform bill.

Did
You Know?02/17/2014: Two business personal property tax bills that would significantly
impact Hoosier working families are wending their way through our Indiana
General Assembly . Listed next are summaries of the key provisions of both
bills and an analysis of these key provisions from a Taxpayer Friendly
standpoint.

(1) If the value of a taxpayer's business personal property in a county
that would otherwise be subject to taxation is less than $25,000 for an
assessment date beginning with the Pay 2016 property tax year, (a) the
taxpayer would not be required to file a business personal property return
in the county for that assessment date and (2) the taxpayer's business
personal property in the county would be exempt from taxation for that
assessment date. The taxpayer would be required to file an annual
certification with the county assessor. For property taxes payable in
2013, there were about 200,700 out of 292,000 personal property tax
returns (69%) that had an estimated book value less than $25,000. To keep
tax increment financing (TIF) revenues mostly unchanged, the allocation of
TIF revenues would be based on a calculated tax rate that includes the
personal property assessed value that would otherwise be exempted. The
statewide impact on Pay 2016 property taxes would be as follows: (a)
businesses would pay $54.4 million less personal property tax, (b)
homesteads would pay $8.8 million more, (c) other residential would pay
$2.1 million more, (d) apartments would pay $0.4 million more, (e)
agricultural real property taxes would increase $3.6 million, (f) other
real property taxes would increase $7.9 million. The net property tax loss
of $31.5 million to local county, township, city, town, school, library,
and special government units would vary from county to county – from
$6,471,850 in Marion County to $8,340 in Ohio County.

(2) The following business income tax changes would be made: (a) the
corporate income tax rate would be phased down from 6.5% through 2015, to
6.0% in 2016, to 5.5% in 2017, to 5.0% in 2018, and to 4.9% in 2019 and
thereafter; (b) the financial institutions tax (FIT) rate would be phased
down from 6.5% in 2018, to 6.0% in 2019, to 5.5% in 2020, to 5.0% in 2021,
and to 4.9% in 2022 and thereafter; (c) the research and development tax
credit percentage would be reduced by half for qualified research expense
incurred after 2014; (d) the college contribution, riverboat building,
biodiesel production, ethanol production, and new employer tax credits
would not be awarded after 2014; (e) the voluntary remediation and energy
savings tax credits would be repealed. The cumulative state revenue
declines from these business income tax changes would be $13.1 million in
fiscal year 2017, $53.6 million in fiscal year 2018, $99.3 million in
fiscal year 2019, and $113.3 million in fiscal year 2020. Because current
law requires that the total amount of FIT distributions to local entities
in a fiscal year be equal to 40% of the total FIT revenue collected during
the preceding fiscal year, phasing down the FIT rate would result in
statewide local FIT distribution declines of $1.0 million in fiscal year
2020, $2.8 million in fiscal year 2021, $4.7 million in fiscal year 2022,
and $5.8 million in fiscal year 2023.

(3) The Commission on Business Personal Property and Business Taxation
would be established to study the following during the 2014 legislative
interim: (a) issues concerning the taxation of business personal property
and business taxation in general, (b) issues related to the share of the
overall tax burden borne by businesses in Indiana, (c) the competitive
advantages and disadvantages for businesses in Indiana that result from
the structure of state and local taxation, (d) any special elements of the
taxation of business personal property, (e) issues related to the share of
property tax burden borne by nonbusiness taxpayers, (f) the impact on
local government of reducing business personal property taxes, (g) other
topics as assigned. The eleven-member Commission would consist of six
legislators, four lay members, and the governor or his designee, and would
submit its final report to the Legislative Council before November 1,
2014.

A county income tax council would be empowered to adopt an ordinance to
exempt from property taxation any new business personal property (other
than utility personal property) that is located in the county. Taxpayers
would not be required to file an application, and the exemption could be
effective as early as taxes payable in 2015. Property tax rates would
increase as new personal property is exempted from property taxation . As
a result, property taxes would begin to shift from owners of the exempt
property to all other taxpayers. If the minimum estimated amount of gross
assessed value is lost, then the overall tax shifts and rate-controlled
levy losses could be minimal. However, if all of the non-utility personal
property gross assessed value is eventually lost, then personal property
taxpayers would save $802 million over a ten-year period and tax shifts to
real property could be as much as $276 million. The net 10-year property
tax loss of $525.3 million to local county, township, city, town, school,
library, and special government units from exempting all new non-utility
business personal property tax would vary from county to county – from
$114,267,240 in Marion County to $52,700 in Ohio County. Increased tax
rates would also result in increased tax increment financing (TIF) revenue
for real property TIFs. Revenue may rise or fall in personal property TIFs
depending on the reduction in assessed value in the TIF allocation area
versus the tax rate increase.

TAXPAYER FRIENDLY ANALYSIS

HB 1001 is Taxpayer UNfriendly for the reasons listed next.

A. County income tax councils threaten the American concept of majority
rule because it is possible for elected officials representing a minority
of a county’s population to adopt an ordinance exempting from property
taxation any new non-utility business personal property: see http://www.finplaneducation.net/income_tax_councils.htm.

C. Local county, township, city, town, school, library, and special
government units could experience a significant decline in property tax
revenue.

D. A February 2014 Information Brief from the Indiana Fiscal Policy
Institute (http://www.indianafiscal.org/)
concludes, “Studies have shown taxes on business personal property have
a small effect on business relocation from outside a state, but depending
on the structure if enacted could have a larger effect on relocation
decisions from county to county within the state.”

E. A December 2013 study titled ‘'Local Tax Abatement” (http://projects.cberdata.org/75/local-tax-abatement)
from the Ball State University Center for Business and Economic Research
includes the following results: “We report findings that suggest that,
as a job creation tool, local tax incentives in Indiana appear to be
minimally effective. We also report that there is not a strong
relationship between abatements and the growth of assessed value over
time. The implication is that, on average, the use of abatements as a tool
for growing a property tax base is not particularly effective in the short
to intermediate term."

F. Indiana Code 6-1.1-12.1-17 already allows local jurisdictions to
grant up to 100 percent abatement of real and personal property for up to
10 years.

G. Elimination of the business personal property tax is primarily a
business tax shift proposal instead of an economic development proposal.

The current version of SB 1 is taxpayer neutral.

The
relatively small increase in homestead property taxes from exempting
business personal property taxes below $25,000 is offset by the
business-friendly savings derived from no longer having small businesses
complete and local assessors process tens of thousands of personal
property tax forms that yield a tiny fraction of total property tax
payments. State revenue losses from the proposed business income tax
changes could be easily offset by the state’s ample reserves. The summer
study commission report on business taxation will have to be carefully
reviewed to make certain homeowners are not adversely impacted by
recommended business tax shifts.

SB 1 would be Taxpayer Friendly if the state
provides a personal property tax replacement credit that replaces lost
local revenue without local tax increases.

Hot
Topics.

Who
Are Your Elected Officials: You can enter your address or click on
a map to see a list of all your elected official - local, state, federal -
in one place. All information on this site is maintained by your local
county circuit court clerk's office in conjunction with the Indiana
Secretary of State's office.

Indiana
Transparency Portal: This one-stop online portal for state
government information provides easy access to all state contracts,
employee salaries, an interactive budget section, revenue data, state debt
authority overview, financial statements for both local governments and
state government, performance information, and recovery and reinvestment
act information.

Third Grade Best Practices Practices
Inventory Report: Nine "Best Practices" have been
identified from the Best Practicesdata
provided by some Principals of the Indiana elementary schools that
were among the Third Grade Spring 2010 ISTEP+ Results Leaders. These improvement ideas
will be helpful to those Hoosiers concerned about K-12 public education.

2008 House Bill 1001: Thanks
to the November 2, 2010 passage of the Constitutional
Amendment, this comprehensive
property tax relief bill makes the
state and local tax burden of Hoosier working families more fair and affordable
by moving away from property taxes to sales and income taxes.

Redevelopment
Commissions Oversight: Watchdog Indiana supports much improved
oversight over redevelopment commissions and departments by (a) the
legislative or fiscal body of the taxing unit that created a redevelopment
commission or department, (b) the State Board of Accounts, and (c)
everyday Hoosiers through the public meeting and public records laws.

Township Government Reform:
Watchdog Indiana has developed a position on township government reform
that includes placing the public question "Shall the township
government be retained?" on the ballot in every county.

Indiana Foreclosure Prevention
Network: If you or someone you know is behind on the mortgage, or
even in danger of falling behind, please contact the IFPN, a statewide
program to provide free mortgage foreclosure counseling and education to
at-risk homeowners. All Network services are free, and all Network
counselors are certified by the U.S. Department of Housing and Urban
Development, or HUD.

IHCDA University:
The Indiana Housing and Community Development Authority has a free online
course to educate prospective homebuyers on the home purchasing process.

Lobbyists
and the Legislature: How much do lobbyists spend? Which lawmakers accept
gifts from lobbyists? The Indianapolis Star has established a searchable
database of Indiana General Assembly lobbyist spending for the reporting periods
from May 2009 through April 2010.

E-mail to the Editor of your
local newspaper a letter or opinion article about state
cash revenues, cash spending, and long-term debt assumption. Use Letters
To The Editor Via E-mail to find the E-mail address of the
Editor of your local newspaper.

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